4.6. How to Include Activities under Article 3.4: Modalities, Rules, and Guidelines

Article 3.4 calls for a decision not only on which additional activities will
be added to the accounting of national commitments under the Protocol but also
on how they will be added. This section discusses technical issues that relate
to selected questions about how activities might be treated if they are added
under Article 3.4. What modalities, rules, and guidelines (MRGs) might be considered
to preserve the spirit, intent, and consistency of the Protocol and the United
Nations Framework Convention on Climate Change (UNFCCC)?

The text of Article 3.4 provides two requirements: Activities should be "human-induced,"
and they should be "related to changes in greenhouse gas emissions by sources
and removals by sinks in the agricultural soils and land-use change and forestry
categories.." (Figure 4-1). Section
2.3.3.1 discusses the concept of "human-induced" (and whether it differs
substantially from "direct human-induced" as in Article 3.3). Articles 5.1 and
5.2 of the Protocol refer specifically to the IPCC Guidelines for estimating
and reporting GHG emissions by sources and removals by sinks (see Chapter
6). Article 3.4 also requires that uncertainty, transparency in reporting,
and verifiability be taken into account.
The remainder of the Kyoto text includes at least four MRGs that are imposed
on some other activities. Although there is no explicit linkage between these
portions of the Kyoto Protocol and Article 3.4, they suggest the kinds of MRGs
that might be considered for Article 3.4 activities:

Article 3.3 limits credits to activities "since 1990;" Article 3.4 has the
same requirement for the first commitment period.

Article 3.3 measures net changes in GHG emissions in the land-use change
and forestry categories as "changes in carbon stocks in each commitment period."

Articles 6 and 12 require that any creditable reduction in emissions or
enhancement of sinks be "additional to any that would otherwise occur."

Article 12 permits banking of "certified emission reductions obtained during
the period from the year 2000 up to the beginning of the first commitment
period."

Other potential MRGs have been discussed, and many more could be suggested.
Three that have generated particular discussion follow:

A requirement that activities be defined or paired to ensure that both increases
and decreases in carbon stocks are captured.

A system to apply an adjustment factor to credits for carbon sequestration-to
encourage emissions reductions in other categories (e.g., the energy sector),
recognize higher uncertainty in measurement of sinks, or recognize the lower
reliability over time of enhanced sinks in the biosphere relative to forgone
emissions in some other sectors.

A system to put a limit on the extent to which a party can meet its commitments
through credits for sequestration.

The following sections briefly discuss these seven potential MRGs and the implications
of their application to Article 3.4. Clearly, many different combinations or
scenarios could be chosen. Moreover, we consider the possibility that MRGs might
be different for the first commitment period (for which commitments have already
been agreed) than for the subsequent commitment period (for which commitments
have yet to be agreed). The appropriate set of MRGs may depend on whether the
term "activity" is defined broadly or narrowly. We recognize that there is a
linkage between the opportunities available for meeting commitments under the
Protocol, the MRGs for calculating credits, and the expectations that the Parties
had for these credits when they negotiated their commitments.